Saudi car rental firm Lumi hires IPO advisors for Tadawul debut

19 April 2023 3 min. read

Saudi Arabian car rental company Lumi has hired corporate finance consultants to guide the sale of its upcoming public listing.

Announced in December last year, Lumi plans to go public to fund its further growth objectives. Having filed its request to the Saudi Arabia Capital Market Authority (CMA), the car rental company earlier this month received clearance for its initial public offering (IPO) on the Tadawul exchange, Saudi Arabia’s main stock market.

The exact date of Lumi’s debut on the exchange has not been unveiled, however, known is however that companies that secure approval from the CMA have six months to launch their public share sale.

Saudi car rental firm Lumi hires IPO advisors for Tadawul debut

Founded in 2017, the popular Saudi automobile rental company Lumi offers a variety of vehicle types, including trucks, SUVs, sports vehicles, catering to both the economy and luxury segments. Lumi has a fleet of 19,000 vehicles and is currently active from 25 locations in Saudi Arabia, nine of which are airports. The company also offers chauffeur services and has a business that sells used vehicles to consumers.

According to the bourse filing by Lumi’s parent business Seera (a significant player in the nation’s tourism and travel industry), 30% of Lumi’s share capital will be offered through the issuance of 16.50 million ordinary shares.

Saudi Fransi Capital, the financial advisor and joint bookrunner, and EFG Hermes, the joint bookrunner, have been appointed to oversee the IPO process. The names of other consultants involved in the transaction, including financial, legal, and communication advisors, have not yet been disclosed.

According to research from Glasgow Research & Consulting, the Saudi Arabian car rental market is expected to grow at a compound annual growth rate of 8.6% up to 2027, to reach a market size of 9.8 billion riyals ($2.6 billion).

With its planned influx of capital, Lumi aims to increase its market share through entering new markets and expanding its lines of business.

“Our goal is to sustain our market leadership through innovative services that meet the requirements of our growing base of government clients, corporates, families and individuals,” said Azfar Shakeel, CFO of Lumi.

“At the heart of our plan is Lumi’s focus on bringing innovative services that not only transform the vehicle rental business but also create exceptional lifestyle experiences for our customers.”

IPOs in the region

The upcoming listing by Lumi continues a string of flotations in the Middle East, at a time when the global IPO market is subdued. The trend buck reflects a positive sentiment among regional investors as well as the stability and economic progress of the Middle East as a whole. Businesses meanwhile are becoming more aware of the advantages of going public as a way to raise money and grow their operations.

Earlier this month, Al Ansari successfully listed in Dubai (at a valuation of $2.1 billion), while in March, Abu Dhabi saw a massive listing when Adnoc Gas raised $2.5 billion.

Companies from the Middle East raised $21.9 billion through IPOs in 2022, more than half the total for the wider Europe, Middle East and Africa region, Dealogic data shows.

The IPO trend is expected to continue this year, according to dealmakers, as more companies in the region explore the possibility of going public to support their growth plans, in part driven by large state privatisation agenda’s.